FTC: Income and Weight Loss Substantiation Required

As of midnight tonight, this is deceptive advertising per the FTC…

MLM company top earner Sylvester trots out on stage and exclaims,

“I earned $137,250 in my first 90 days doing this.”

Not. Not without also adding or conveying clearly:

“Most people who do this business for 90 days make $XX” or they “make no money” [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][- whatever the company records show]

If Sly or his company can substantiate – with company numbers – that the average person makes what Sly says he did in the same time period, he’s fine to use the words he did. Otherwise, according to the FTC 16 CFRR Part 255.2 Consumer endorsements, it’s likely to be considered deceptive advertising by the FTC. Here’s why:

Because most people, hearing Sly earned $137,873 in 90 days without any further explanation, get the impression that anyone can do it, and that they can too. You know, as if it were typical. Of course all experienced networkers know Sly’s story is not typical. But the new people listening to this are in the dark.

Companies and recruits pocket lots of first time orders from naive folks who throw that hat in the ring without the slightest idea of what it takes to make any kind of income. This is what the FTC hopes to end.

Don’t misunderstand – yes of course people can go after the big score – but they must not do that without knowing what the typical person makes in 90 (or whatever) days – if that is what is represented in front of the room or in the ad, and nothing else.

“If the advertiser (read the company) does not have substantiation that the endorser’s (Sly in this case) experience is representative of what consumers will generally achieve, the advertisement (in whatever form in any medium-kk) should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.”

Same with weight products. No longer can a company trot out formerly obese Lulu to say:

“I lost 50 lbs in 6 months with WeightAway”

because, says the FTC “that ad is likely to convey that her experience is representative of what consumers will generally achieve.” If the product users do not generally lose 50 pounds (including if they don’t have that much to lose), the testimonial or ad should

“clearly and conspicuously disclose what they can expect to lose in the depicted circumstances (e.g. most women who use WeightAway for six months lose at least 15 pounds.”

And that too, must be substantiated. See rules here.

Here’s one way the FTC says you can get around this: Tell, in detail, the circumstances of the big earnings or big weight loss. In their example, the FTC writes:

“Every day I drank 2 WeightAway shakes, ate only raw vegetables and exercised vigorously for six hours at the gym. By the end of six months, I had gone from 250 pounds to 140 pounds.”

Because, say the FTC rules,

“the ad accurately describes the woman’s experience and such a result is within the range that would be generally experienced by an extremely overweight individual [who did just as much as the endorser above, did.] See rules here.

Same with the income. Sly could perhaps disclose that yes, while he only had a high school diploma, he was an experienced networker and came in with 200 members of his previous company team. He worked the business 24-7, with his recruiter group, and got 183 of them to buy that first $2500 starter package which earned him 30% off the top for the first two levels. (183 recruiters buying the $2500 initial package on levels one and two, earning him $750/ea).

Anyone else who did that would have similar results. 🙂

Now what?

To avoid FTC scrutiny for deceptive advertising, another option is not to lead with any income stories at all – at least not for total newbies. (Experienced networkers are a different ball of wax. Next time.)

Why build up money expectations for newbies, when they first need to learn the ropes? And shouldn’t they first discover, by doing it, if they even like it enough to overcome the many hurdles of a sales business like this?

So where does this leave the NM recruiting business?

I suspect the recruiting and customer getting game will revolve much more around what one company or another pays for the sales brought in – calculated and compared off the top (after adjusting for the points used by some companies).

Say a customer sale is $100/mo. Would you rather earn $10 or $30 on the order? You’re doing the same work, right?

Or, if a recruiting package is $500, would you rather get $50 or $100?

For experienced mlmers – would you rather be paid a higher percent for your levels one and two, or higher percents on the deeper ones?

Who will pay me the most for what I love doing in this business? (Recruiting v customers or perhaps both.) Assuming comparable products.

No longer can the income testimonials be used as bait like before. Given the MLM haters, I suspect folks will be reported within moments of any violations in ads, blogs, meetings that are open to the public, or conference calls.

Enough already. COMMERCIAL.

I am teaching a Recruiting Tele-Seminar starting December 2. It’s based on and extends the strategies in the Art of Recruiting program here. See bottom of “9 Cruise Recruiting Tips” here for some on-the-house recruiting tips. Of course we will address these issues in class. Totally cool challenges, if ya ask me.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

About the author

Kim Klaver


  • It remains to be seen just how the new FTC rules will actually impact the MLM/NM industry, especially given the fact that the compliance process will be completely complaint-driven – as they always have been.

    You can bet your bottom dollar that the anti-MLM "jihadists" (they like to hang out over at and hatch their plots for world domination) will attempt to bring down any and all NMers whether any violation is evident or not, by filing complaint after complaint.

    But the bottom line is that the new FTC rules are mostly an attempt to force people to do what most ethical business people have been doing all along – namely, being truthful and "transparent" in all of their communications about their product/service/business opportunity.

    Quite frankly, if you stick to those fundamental guidelines, I don't think you're going to have very much to worry about. But what concerns me most is all of those company-provided replicated websites out there that aren't in compliance. Even though the Company is technically responsible for the content of those websites, you – as their distributor – could end up being held at least partially responsible for any violations (sort of like an "accessory after the fact").

    If you see an obvious violation on your replicated site, you should contact your company's Distributor Relations or Legal department and make them aware of it.

    (It might be a good idea to suspend your promotions until the "violation" has been remedied by the company as well.)

    Mind you, I'm not an attorney, nor do I play one on the internet. If you want solid legal advice on any matter concerning your business, you should buy it from a well-qualified provider!

    These are interesting times indeed! It'll be interesting to see how all of this shakes out.

    See you on the radio!

    "Digital" Don Hill
    Co-Host – Google Me Talk Radio

  • Great job as usual Kim, making FTC rules both understandadable, informative, fun to read, and providing examples that one could follow and use in the business.


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